Economics Assignment
Question 1
Define book depreciation
a) Book depreciation is used on internal financial records to reflect deferred capital investment in the asset.
b) Book depreciation is used on internal financial records to reflect future capital investment in the asset
c) Book depreciation is used on internal records to reflect the current capital investment in the asset
d) Book depreciation is used on internal financial records to reflect past capital investment in the asset.
Question 2
Air handling equipment that costs $12,000 has a life of 8 years with a $2000 salvage value.
(a) Calculate the straight line depreciation amount for each year.
a) Dt = $1050
b) Dt = $1550
c) Dt = $1350
d) Dt = $1250
Question 3
Air handling equipment that costs $12,000 has a life of 8 years with a $2000 salvage value.
(b) Determine the book value after 3 years.
a) BV3 = $10,250
b) BV3 = $8250
c) BV3 = $7500
d) BV3 = $0
Question 4
Air handling equipment that costs $12,000 has a life of 8 years with a $2000 salvage value.
(c) What is the rate of depreciation?
a) d = 0.125
b) d = 0.375
c) d = 0.250
d) d = 0.500
Question 5
A warehouse costs $800,000 to construct for Ace Hardware. It has a 15-year life with an estimated resale value of 80% of the construction cost. However, the building will be depreciated to zero over a recovery period of 30 years.
Calculate the annual depreciation charge for years 5, 10, and 25, (a) using straight-line depreciation.
a) Dt = $14,650 t = 5, 10, 25, and all other years
b) Dt = $25,000 t = 5, 10, 25, and all other years
c) Dt = $26,667 t = 5, 10, 25, and all other years
d) Dt = $39,440 t = 5, 10, 25, and all other years
Question 6
A warehouse costs $800,000 to construct for Ace Hardware. It has a 15-year life with an estimated resale value of 80% of the construction cost. However, the building will be depreciated to zero over a recovery period of 30 years.
(b) Calculate the annual depreciation charge for year 5 using DDB depreciation.
a) D5 = $39,472.
b) D5 = $42,472.
c) D5 = $50,472.
d) D5 = $40,472.
Question 7
A machine with a 5-year life has a first cost of $20,000 and a $2000 salvage value. Its annual operating cost is $8000 per year. According to the classical straight line method, the depreciation charge in year 2 is nearest to
a) D = $4000
b) D = $1200
c) D = $3600
d) D = $1600
Question 8
A machine with a useful life of 10 years is to be depreciated by the MACRS method over 7 years. The machine has a first cost of $35,000 with a $5000 salvage value. Its annual operating cost is $7000 per year. The depreciation charge in year 3 is nearest to
a) D = $5860
b) D = $4320
c) D = $3600
d) D = $6120
Question 9
The depreciation recovery rate used for comparison with any method's rate is most commonly _________________.
a) DB rate
b) MACRS Rate
c) Straight Line Rate
d) DDB Rate
Question 10
Land is an example of __________________.
a) Personal property, and it is depreciable
b) Real property, but it is not depreciable
c) Real property, and it is depreciable
d) Personal property, but it is not depreciable
Question 11
Write the equation to calculate TI for a corporation, using only the following terms: gross income, tax rate, business expenses, and depreciation.
a) TI = TI*GI - E - D
b) TI = GI - E - D
c) TI = GI - E - DoD
d) TI = GI - E - 1
Question 12
Write the equation to calculate NPAT for a corporation, using only the following terms: gross income, tax rate, business expenses, and depreciation.
a) NPAT = (GI - E - D)(1 - T)
b) NPAT = (GI - ET -D)(10 -D)
c) NPAT = (TGIF - E - D)(1 - E)
d) NPAT = (GIFT - E - D)(100 - T)
Question 13
Define income tax for an individual.
a) Income tax for an individual is based on the amount of money deferred from a salary for a job, contract for services rendered, and the like.
b) Income tax for an individual is based on the amount of money refused from a salary for a job, contract for services rendered, and the like.
c) Income tax for an individual is based on the amount of money received from a salary for a job, contract for services rendered, and the like.
d) Income tax for an individual is based on the amount of money donated from a salary for a job, contract for services rendered, and the like.
Question 14
Define what property tax is based on.
a) Property tax is based on the "wife's best guess" worth of things owned, such as house, car, and personal possessions like jewelry, art, etc.
b) Property tax is based on the "mother-in-law's best guess" worth of things owned, such as house, car, and personal possessions like jewelry, art, etc.
c) Property tax is based on the "the neighbor's best guess" worth of things owned, such as house, car, and personal possessions like jewelry, art, etc.
d) Property tax is based on the appraised worth of things owned, such as house, car, and personal possessions like jewelry, art, etc.
Question 15
From the following list, select the tax-related term that is best described by each event below: depreciation, operating expense, taxable income, income tax, or net profit after taxes.
(a) A corporation reports that it had a negative $200,000 net profit on its annual income statement.
a) Net profit after taxes
b) Operating expense
c) Depreciation
d) Income tax
Question 16
From the following list, select the tax-related term that is best described by each event below: depreciation, operating expense, taxable income, income tax, or net profit after taxes.
(b) An asset with a current book value of $80,000 was utilized on a new processing line to increase sales by $200,000 this year.
a) Depreciation
b) Taxable income
c) Operating expense
d) Net profit after taxes
Question 17
From the following list, select the tax-related term that is best described by each event below: depreciation, operating expense, taxable income, income tax, or net profit after taxes.
(c) A machine has an annual, straight line write-off equal to $21,000.
a) Net income
b) Operating expense
c) Depreciation
d) Taxable income
Question 18
From the following list, select the tax-related term that is best described by each event below: depreciation, operating expense, taxable income, income tax, or net profit after taxes.
(d) The cost to maintain equipment during the past year was $3,680,200.
a) Taxable income
b) Operating expense
c) Depreciation
d) Net profit after taxes
Question 19
From the following list, select the tax-related term that is best described by each event below: depreciation, operating expense, taxable income, income tax, or net profit after taxes.
(e) A particular supermarket collected $23,550 in lottery ticket sales last year. Based on winnings paid to individuals holding these tickets, a rebate of $250 was sent to the store manager.
a) Income tax
b) Net profit after taxes
c) Taxable income
d) Operating expense
Question 20
Yamachi and Nadler of Hawaii have a gross income of $6.5 million for the year. Depreciation and expenses total $4.1 million. If the combined state and local tax rate is 7.6%, use an effective federal rate of 34% to estimate the income taxes, using the effective tax rate equation.
a) Taxes = $936,000
b) Taxes = $933,000
c) Taxes = $942,000
d) Taxes = $939,000